The Costs and Liabilities of Using Old Computers

States must create better ways of modernizing important computer systems before they become a liability.

The cost of replacing major government IT systems can be enormous, but the price tag might be even higher for keeping them running long past their prime. Take California, for instance. This summer, Gov. Arnold Schwarzenegger planned to pay state workers the federal minimum wage during California's seemingly annual budget stalemate. But state Controller John Chiang asserted that the state's Vietnam-era payroll system couldn't process the temporary pay cut.

Granted, the issue is wrapped in politics -- the Republican governor's officials say Chiang, a Democrat, is exaggerating the problem -- but there's certainly some truth to the notion that 30- to 40-year-old computer systems struggle to keep up with changes demanded by political leaders. And there are probably more of these ancient government systems chugging away in agency back offices than state and local officials care to admit.

Dale Jablonsky, who until August was CIO of the California Employment Development Department (EDD), knows the situation all too well. The EDD runs California's unemployment insurance program, where caseloads skyrocketed during the current recession. As the economic downturn deepened, Congress repeatedly extended the length of time individuals could draw unemployment benefits. In all, federal lawmakers approved seven benefit extensions since the recession began -- and each was a nightmare for the EDD.

Every extension requires changes to several hundred interconnected computer programs in the EDD's eligibility system. Those programs are written in common business oriented language (COBOL), an ancient programming language, and modifications must be hand-performed by increasingly rare -- and expensive -- COBOL experts.

"It typically takes two to three weeks to implement changes, depending on how complex the federal legislation is," Jablonsky says. "Sometimes the legislation is so complex it takes five to six weeks to implement."

Indeed, implementing one particularly complex piece of legislation in late 2009 required changes to 650 programs in the EDD system. The resulting delay in mailing unemployment checks made front-page news throughout the state and landed Jablonsky before angry state lawmakers who demanded an explanation.

"That's the one we took a lot of heat for," Jablonsky says. "There were close to 110,000 claimants who were entitled to benefits, but because of our problems in getting those changes in, they were delayed several weeks."

The EDD's system, a poster child for outdated technology, dates back to the 1970s. Besides its spaghetti-like web of COBOL programs, adding or changing information in the eligibility database is a nightmare because pieces of data must be rearranged manually. Imagine a spreadsheet with millions of columns, says Jablonsky, but none of the columns shift automatically to accommodate a new piece of information. Each bit of existing data must be moved by hand to make room.

The system's not only inflexible, it's also huge: It handles 7 million transactions daily and rivals the global Sabre airline reservation system for sheer complexity.

Thanks to an infusion of federal funds, the EDD is gradually updating its eligibility system with more modern technology, which will let it react more quickly to legislative requirements, improve defenses against identity theft and make it simpler for the EDD to serve citizens via the Web. But modernizing the system won't be easy.

Jablonsky likens the task to remodeling an old house: It's an undertaking filled with expensive and unanticipated complications. The EDD's IT staff is unraveling multiple layers of system interconnections and 40 years of programming shortcuts. "The older the system and the more comprehensive the change is, the more you're going to find these surprises," he says. "And you have to take them on."

Jablonsky, who left a 26-year career at the EDD to become CIO of the California Public Employees' Retirement System (CalPERS), says the EDD project is "positioned for success." But he adds that states must create better ways of modernizing important computer systems before they become a liability. In California, Jablonsky suggests creating an annual budget appropriation to fund IT modernization. "The current budget process is pretty much set up to maintain status quo, and your IT systems can't stay at status quo," he says. "And you can't rely on the good intentions of temporary management that occupies an agency, because top management changes every election year."